Peru’s Public Sector Budget bill for fiscal year 2016 proposes productive expenditure focused on education and public investment, which will contribute to continue boosting the Peruvian economy, Moody’s Investors Service reported.
“Special emphasis should be put on education and public investment, which is productive expenditure and will prevent the economy from further slowdown, so that the next government does not enter into office amid extremely adverse conditions,” it indicated.
Wide Fiscal Space
The Vice President - Senior Analyst Jaime Reusche said the increase in nominal terms is modest and complies with the fact that authorities are looking to maintain the fiscal stimulus during 2016.
“This is in order to face upcoming challenges, including El Niño weather event, which seems to be much stronger than expected,” it noted.
Moody’s claims the country has an ample fiscal space to absorb the foreseen deficit (of 3% of GDP for 2016).
“Although this indicates a higher-than-normal deficit would be maintained, there is a wide fiscal space to absorb such deficit, since dept level is low and fiscal savings were achieved during the good years,” it added.
(END) RGP/JJN/RMB/MVB
Published: 9/2/2015